SIPPs for children - difference of opinions with OH

RNV

I know this is a balance/personal judgement type of question and as such does not have “the answer is” but wanted to ask what are “wise people”s  thoughts on this?

1. 2 kids, pre-teens
2. Each have a Junior Cash ISA, but only small monthly contributions (£50/each); £6k/year go into an S&S ISA in OHs name [so that we are in control longer] earmarked for them.
3. There are assets [2 relatively modest value properties currently rented] money from the sale of which will eventually be passed to them – so university costs and help with house deposits is covered from here.
4. There are other provisions (mine & OH DCs, 2 x SPs, savings), so  2 & 3 are not relied upon for our own needs in retirement;  unless an Armageddon type of situation. 
5. I’m trying to max my own DC at the expense of everything else at the moment, hoping to retire in 5-ish years at 55.
6. Because of my own experience (being a late pension starter now desperately wanting to retire early), I’m trying to convince OH to start SIPPs for them now. OH is not buying into it, full stop. Main argument - too long to lock the money for them; we better help them earlier.

Failing to get OH onboard, my only choice now is to ignore OH and open SIPPs for kids myself now and contribute say $1.2k/each myself (reducing my own pension contributions).  Or, considering  2 & 3, am I grossly overestimating the added value of  “low value” SIPPs opened now, rather than when they are in their 20s?

 Thanks for your thoughts

dunstonh

It all depends on how much money you want to put aside for them.  If you are already building up lumps that are sufficient for early year needs then moving onto end of life timescales is not a bad thing.  As long as you are not leaving yourself short.

I generally find that, with pensions,  its grandparents doing it for the grandchildren more than parents doing it for their children.

LHW99

It wouldn't hurt just keeping putting money into your DC pension now. Early needs are covered, and you don't know what their earning potential will be in future - could be doctors, and likely want to tuck as much into their own pensions as possible, to get maximum tax relief, in which case there may be other things (marriage / grandchildren) where extra funds would be helpful - or they could be budding actors / artists earning a pittance where cash in the hand could help get on the housing ladder, or somewhere in between where a bit put in their own pensions could be appreciated.

If you are ~50 now, ten years time will show you what their futures hold with more certainty than now, and you could access the tax free part of your DC (without affecting any further payments if you are still working) to help them in the way that then seems best (and with their input).

Albermarle

Failing to get OH onboard, my only choice now is to ignore OH and open SIPPs for kids myself

Probably not a recipe for marital harmony .......

RNV

I know @Albermarle ,  we both are stubborn but manage to live peacefully and share the end results. He pays into ISAs (as "does not believe in pensions" and only have a relatively modest DC pot). I currently Sal Sac 70% of my salary into my DC and subsidise with savings. Hopefully, we happily live together thereafter...

Thanks for comments @LHW99 and @dunstonh -  by contributing into my own DC by SalSac, I'm achieving better results. Probably worth leaving as is for the moment. 

Brie

re the properties.....presumably these are currently in your names. 

Do you propose handing them over to the kids at some point?  (thus eliminating any FTB benefits and potentially allowing them to sell and drop the money on a heck of a gap year) Or have you simply earmarked them as "uni fees etc" so that you can sell them when the cash is needed?  Does one house "belong" to child A and the other to child B?  What if there is a large price difference either due to the property itself or when it's sold?

No need to answer any of that - just wondering if you had consider these things.  I suspect you may have as you do sound fairly money savvy.

Keep_pedalling

Why SIPPs rather than more savings that will definitely be required earlier in life? 

RNV

Brie said:

re the properties.....presumably these are currently in your names. 

Do you propose handing them over to the kids at some point?  (thus eliminating any FTB benefits and potentially allowing them to sell and drop the money on a heck of a gap year) Or have you simply earmarked them as "uni fees etc" so that you can sell them when the cash is needed?  Does one house "belong" to child A and the other to child B?  What if there is a large price difference either due to the property itself or when it's sold?

No need to answer any of that - just wondering if you had consider these things.  I suspect you may have as you do sound fairly money savvy.

Thanks for comments.   Plan is to sell when/as needed and gift cash equally;  may be even "loan" iterest-free some part of it so that not everything "on a silver spoon" - will cross that bridge later.  Both in OH's name -  an accidential landlord, sadly via an inheritance. 

anonmoose

I have opened SIPPs for both of my kids recently.  Both mid teens.  I put in £1k that had been sitting in PBs gifted by a grandparent at birth.  I will also contribute probably 1-2k a year for a few years and my main aim is to get them to start thinking about long term as well as short term savings.  I don't want to go mad as I am conscious about the lifetime allowance for them and more pressing priorities like our own pensions and paying for our uni contributions x 2!  

I read an article showing the cumulative effect of putting in the max allowance for the first few years of life and it blew me away! I am seeing it as giving some of their inheritance early.  My son is already interested in how his investments are doing
  
My eldest has recently started a well paid part time job and I am trying to get her to put in 5% but I can understand she has bigger priorities at the moment.  She is 17 and laughs when I talk of pensions. Just even getting her to think about it is a start.

They also have a small amount in an ISA which originally was earmarked for our uni contribution but I am letting them have it towards house deposit instead.  I just have to trust at 18 they play ball and not spend the money once they have control over it!  They have both agreed it will be saved for a house.  

So I would say go for it.  Although I am the sort of person who would do it anyway even if my husband didn't see the benefits.  But we have the sort of relationship that he wouldn't mind if he knows it's important to me.  Maybe if you phrase it that way and say it is important to you to do this for the kids he might be ok with it.

And in answer to keep-pedallings questions about why SIPP rather than savings needed sooner, I think part of it for me is that I might no longer be here when they will have access to the SIPP and I would love to think it would help them be comfortable in old age.  Hopefully they will be good with money and well paid and my contribution will turn out to be unnecessary, but if they are not so good with money or poorly paid it could help them significantly.

RNV

Thanks for sharing your thoughts, @anonmoose.   

I think I will eventually do it (same here -   will be accepted by OH if important to me). However,  I convinced myself now (it helped to decide having writtent it down in here - thanks to all contributors!)  to delay this for 2 years when I have used up all my carry forward.  Currently, via max Sal Sac,   I better use this to catch up on my own DC.  

Keep_pedalling

anonmoose said:

I have opened SIPPs for both of my kids recently.  Both mid teens.  I put in £1k that had been sitting in PBs gifted by a grandparent at birth.  I will also contribute probably 1-2k a year for a few years and my main aim is to get them to start thinking about long term as well as short term savings.  I don't want to go mad as I am conscious about the lifetime allowance for them and more pressing priorities like our own pensions and paying for our uni contributions x 2!  

I read an article showing the cumulative effect of putting in the max allowance for the first few years of life and it blew me away! I am seeing it as giving some of their inheritance early.  My son is already interested in how his investments are doing
  
My eldest has recently started a well paid part time job and I am trying to get her to put in 5% but I can understand she has bigger priorities at the moment.  She is 17 and laughs when I talk of pensions. Just even getting her to think about it is a start.

They also have a small amount in an ISA which originally was earmarked for our uni contribution but I am letting them have it towards house deposit instead.  I just have to trust at 18 they play ball and not spend the money once they have control over it!  They have both agreed it will be saved for a house.  

So I would say go for it.  Although I am the sort of person who would do it anyway even if my husband didn't see the benefits.  But we have the sort of relationship that he wouldn't mind if he knows it's important to me.  Maybe if you phrase it that way and say it is important to you to do this for the kids he might be ok with it.

And in answer to keep-pedallings questions about why SIPP rather than savings needed sooner, I think part of it for me is that I might no longer be here when they will have access to the SIPP and I would love to think it would help them be comfortable in old age.  Hopefully they will be good with money and well paid and my contribution will turn out to be unnecessary, but if they are not so good with money or poorly paid it could help them significantly.

Surely you had no right to put money gifted to your children by the grandparent into a SIPP. The money was not yours to to make that decision.